The determinants of customers’ trust and perceptions in the fast food industry

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Dissertation

Master in International Business

The determinants of customers’ trust and perceptions in the fast food

industry

Zindy Bertrand Velásquez

Dissertation developed under the supervision of Doctor Cátia Crespo, professor at the School of Technology and Management of the Polytechnic Institute of Leiria.

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Acknowledgements

The present research is a result of days of effort, time, work and dedication, first I want to give thanks to God, creator of wisdom and science, and secondly, I want to give thanks to my teacher and advisor Cátia Crespo who was always patient, available and understanding to guide me through every moment.

In a special way, I would like to give thanks to the team of Cruz Del Sur, who was the program that granted me a scholarship to take my first year of my master's degree. I would also like to express my appreciation to Ana Cecilia Boa Aventura for being an unconditional support throughout my stay here, as well as to the Polytechnic Institute of Leiria for having accepted me as their student.

Biggest thanks to my family, my mother, my father, my sisters Iberia, Bianka and Karen. They have been my most important base and my best team who have always motivated me to get to the end. Special thanks to Mauricio Lang who helped me build the graphs and everything related to their formating. I express my sincere gratitude to my friends who in one way or another helped me with this work.

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Resumo (in Portuguese)

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Abstract

Nowadays the fast food restaurants have reached in a massive way penetrate the whole world, and the demand of the customers continues growing based in their need, lifestyle and wishes. This fast expansion is impacting the economy since fast food franchise is positioned in the market as one of the most significant business positioned not just in United States also around the world (Dant, Kacker, Coughlan, & Emerson, 2007). Every day is higher the demand of people to consume this type of food and this increase has originate a special interest of many researches concerning about health issues, who consider that it is necessary explore the most important indicators of the consumption of fast food among people which in their majority can be influenced by beliefs, cross cultural values, marketing strategies, reference groups and purchasing behavior (Haven, 2015 ).

The main purpose of this research is to investigate the impact of customers trust toward a fast food brand, influence by brand equity dimensions (brand awareness, brand loyalty, perceived quality and other brand associations) and on customer perceptions and behavior (customer satisfaction and word-of-mouth). In order to examine this prediction, the questionnaire was conducted among Nicaraguan respondents in Nicaragua, The statistical analysis of the survey data was run through the PLS program since the model has structural equations. Our findings indicate evidence for the influence of brand equity dimensions namely brand awareness, brand loyalty, perceived quality and other brand associations, and on customer perception and behavior (customer satisfaction and word-of-mouth). Which significantly influence in the relationship and trust of the respondents regarding with their favorite fast food brand. Based on these findings we suggest that fast food brand can strengthen their customer’s trust by focusing on improving these mentioned dimensions.

Keywords: Fast Food Restaurant, Customer Satisfaction, Word of mouth, Brand

Loyalty, Brand image, Brand equity (Brand Awareness, Brand association, perceived quality).

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List of Figures

Figure 1: Fast food restaurant chain McDonald’s ... 5

Figure 2: Fast food restaurant chain Subway ... 6

Figure 3: Brand Equity Model ... 10

Figure 4: Customer Based Brand Aaker’s Equity Framework ... 16

Figure 5: Conceptual Model ... 26

Figure 6: Reliability and Validity of the Model ... 34

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List of Tables

Table 1 ... 11 Table 2 ... 22 Table 3 ... 28 Table 4 ... 33 Table 5 ... 35 Table 6 ... 36 Table 7 ... 37

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List of

Acronyms

AMA- american market association

AVE - average variance extracted

BAS - brand associations

BAW - brand awareness

BE - brand equity

BL - brand loyalty

CBBE customer based brand equity model

FFR - fast food restaurant

OPA - other proprietary assets

PQ - perceived quality

QRS - quick service restaurant

SEM - structural equation modelling

SPSS- statistical package for the social sciences

WOM- word-of-mouth

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1. Introduction

1.1. Scope of the Investigation

According to a research conducted by Metin & Kizgin (2015) fast food markets are changing their methods of international marketing, and adopting new strategies that can be closer to the consumer preferences. Fast food companies are aware that the differences among countries around the world are very big, and these contrast of tastes and needs are the key to “think global”. Since there are a lot of differences among society and nationalities, the way of food preparation may be modified, and therefore adapted to each individual community. In addition, we can understand that in order to meet the goal of providing quality service and responding to customer needs, fast food restaurants chains must have knowledge of the economic, religious, and cultural reality of the consumers who live in other countries.

According with Pingali (2007) we live in a world of constant change, and fast food industry has been influenced by this evolution; the process, preparation, production, and also the consumption of fast food, are affected by this reality. Nowadays people are adopting new eating preferences; in this context, it is remarkable that urbanization is one of the main factors related with the change in lifestyles, the independence of young people, and increased income. Therefore, we can observe that these set of factors influence the habits of the population, increasing their frequency and preferences towards this type of food, specially pizzas, burgers, snacks and fizzy drinks.Marketers of fast food chains continue to identify which are the main needs of customers and since one of their most important goals is to find the way to retain and satisfy customers, many fast food businesses are incorporating better marketing strategies. For instance, they are changing their schedules and diversity in the menu. The centers that before had the business open just for lunch now are opening early in the morning for breakfast, and for dinner, and they are offering a wide variety of food in the menu, in order to the customers to have access to different types of meals. One important example of these new strategies is McDonald’s which started to implement on-line ordering, coupons and arranging concerts inside of the fast food restaurant in order to capture the attention of young people, and conditioning a play area for children which has been very attractive (Baig & Saeed, 2012).

As we already know, marketing strategies play a fundamental role in fast food industry, first, to be able to create and apply suitable marketing strategies, it is necessary to understand the customers’ perceptions and preferences. Customers have different preferences and their choices are influenced by their cultures and countries. Therefore, marketing strategies have to be concentrated in the environment, needs, and perceptions of the customers, and since fast food restaurants preferences vary widely, the promotional campaigns that they use should be adjusted and adapted to individuals cultures and countries (Kara, Kaynak , & Kucukemiroglu , 1995).

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It is noticeable that multinational fast food chains face high levels of competition, and it is not new that price is one of the usual strategies that this type of companies manipulate to increase market share, however price is not the only factor in the eyes of marketers. Nowadays, due to the diversity in customers’ expectations and the changes in multicultural markets, fast food industry has considered to focus their market strategies in the individual needs and desires, with the objective to be more productive in creating customer satisfaction and loyalty. Therefore, in order to apply more viable branding strategies, multinational fast food restaurants have to be aware of the different demands and requests of every individual customer, and work by offering products and services quality, providing a set of functional benefits, able to fill their preferences and expectations (Mohammad, Barker, & Kandampully, 2005).

The fast expansion of fast food chains is growing around the world, and it has aroused interest of many analysts especially concerning health issues. Since the demand of people to consume, this type of food is every day higher, and particularly among young people, it is noticeable that the concerns of a negative impact in the health of consumers has significantly increased. In addition, many researchers consider that in order to understand more deeply the reasons of the consumption of fast food, it is necessary to analyze some of the main determinants of consumer behavior, such as the influence of cross-cultural values and beliefs, purchasing behavior, reference groups and marketing strategies (Haven, 2015 ). The fast food consumption habit is influenced by many factors such as income, education, age, and family characteristics that influence customers’ behavior. , Additionally, the price of the fast food, the concerns about health issues, and child tastes, are considered to be other critical factors, able to influence fast food consumption (Akbay, Tiryaki, & Gul, 2007).

Young people are the category of people with the highest tendency to visit fast food businesses, since a significant part of young people are in a hurry, don’t like to cook and are not concerned about food preparation, consequently preferring to eat out, and to go to fast food places, especially when they don’t have none who cook for them, particularly when they study or work far of home. It is important to highlight that in most of the cases they have the required knowledge about the importance of eating well, of having a healthy life, and about the nutritional value of food. In addition, since young people are frequently identified with low incomes, lack of time, and need to visit places out home to interact with other people, fast food chains are able to connect their services and products to young peoples’ expectations (Untaru & Ispas , 2013).

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1.2. Research Aims

The main objective of this study is to analyze, into a deeper extension, the impact of the brand equity dimensions (brand awareness, brand loyalty, perceived quality and other brand associations) on brand equity, as well as their relationship with customer satisfaction and to evaluate the consequent impact of brand equity and customer satisfaction on consumers’ trust and word-of-mouth, in the fast food sector.

Consequently, the current investigation examines the perceptions and behaviors of customers from Nicaragua, regarding international fast food brands. We look into in the past theory and literature backing up the most important variables and indicators that sustain our research. The practical part of the present investigation will be conducted through a survey on a national level, which took a period of two months to gather the information required and with one additional month to analyze the responses of the participants in the survey.

1.3. Contribution Proposed

The main contribution of this study is to identify which are the main factors that influence in customers’ trust regarding to a fast food brand based on the brand equity dimensions (brand awareness, brand loyalty, perceived quality and other brand associations) and on customer perceptions and behavior (customer satisfaction and word-of-mouth). The following research will contribute both to the academic and managerial level, interested in understanding the main determinants of customer’s trust especially when it is influenced by different cultures and different way of life.

1.4. Dissertation Structure

The structure of this investigation is the following: first we explore the past literature related with the main aim of this dissertation, second, based on the literature review, the hypotheses and conceptual model will be proposed, third the methodology is presented, followed by the data analysis. Finally, we will describe the main results and implications, as well as limitations and future research orientations.

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2. Literature Review

2.1. Contextualization of the Fast Food Industry

Fast food restaurants have expanding around the world with more growing every day. The need of people, their lifestyle, the culture, the work status, and the socio - economic changes are some of the factors related with this increase. Fast food restaurants (FFR) are known as quick services restaurant, which are distinguished by some characteristics, namely time required, the easy way to eat with fingers, making it a “finger food“ and usually the take away service. “Fast food “is a concept that was recognized in a dictionary by Merrian – Webster in 1952

(Salami, 2012). The growing of a franchise business represents an important meaning to the economy, franchising

is growing with immeasurable speed, and has been positioned as one of the most successful modes of retailing not just inside in the U.S (United States), but all around the world (Dant, Kacker, Coughlan, & Emerson, 2007). According to the Federal Trade Commission in FTC Rule 436 (which was amended effective July 1, 2008) U.S., franchise is defined with the presence of three conditional elements, which represent a business connection, namely: 1.The right or use of a common trademark or name; 2. Providing of “significant assistance”; and 3. A demanding payment in the first six months of operation by the franchisee (including initial fees, royalties, advertising fees, training fees, or fees for equipment (Siebert, 2015).

In general, a franchise business has many advantages and disadvantages that are very important to consider, for example franchisees can identify as one of the main advantages the use of a recognize brand, less uncertainty because the business is based on approved idea, the support of the franchisor which usually provides training and assistance, financing can be easier with the banks, the risk is reduced and shared by the franchisor. On the other hand, there are many disadvantages such as the payment of royalties and the franchising agreement, which generally includes restrictions about the management of the business (Ronsen, 2015).

Today the culture of eating out is very common among people and this trend has allowed the increase of fast food restaurants. This type of food is usually prepared and processed, follows a series of steps, with some methodical systems and stereotyped ingredients. Although internationally fast food restaurants can be perceived as possessing similar characteristics of its products and services, they can include different variations regarding to preferences, culture, and local taste (Nasheen, 2017). Nowadays, eating out of home (eating-out) is increasing in every culture and this habit is more common in teenagers and young adults. Additionally, eating out is associated as one of the most influential factors responsible for the choice to eat less nutritious and healthy food, as well as with high fat consumption (Lachat, et al., 2012).

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Figure 1: Fast food restaurant chain McDonald’s

There are many reasons for which people decide to eat fast food. The most common reasons are: the quick service, restaurants of fast food have a strategic geographic position, which mean they are easy to get, the environment of fast food restaurants, the taste of the food, and the desire of not preparing food at home (Rydell et

al., 2008) Fast food sector development is huge, the trend of people to eat out, and to visit this type of restaurants

is day by day more popular. Moreover, the consumer of fast food prefer this type of places, for socialization, convenience, and hang out activities (Aysha & Munazza , 2012).

Further, fast food is increasing its demand in the world because of the low prices and taste. One important weakness in the fast food industry is related to the new tendency of healthy food, which is an emerging orientation, that is being highlighted in the marketplace (MacGowan, 2012). Additionally, this new line that includes different type of healthy diet, contributes to the health care and the well-being of customers, which makes a difference in, compared with some fast food restaurants.(Lesser et al., 2013). Nowadays, the leading healthy fast food restaurant is SUBWAY, which is considered “the world’s biggest submarine sandwich Franchise”. SUBWAY offers different types of fresh sandwiches, Subs, wraps and soft drinks. They also have the service of take away to guarantee a better service for the customers, and one of the most competitive advantages of this food industry is the fresh food that they offer.

Because of the interest that customers have on this type of healthy food tendency, there is an important advantage of Subway against competitors such as MacDonald’s or Burger King, Therefore, Subway is creating an important and different value for people aware of taking care of their health and body in food consumption (Zhou,

2016). Fast food industry are aware that service quality is decisive for the impact among the behaviour of their

consumers and for its business successful development (Namin, 2017). Therefore, if they provide a high and variety food quality, they will ensure customer satisfaction. Further, food quality is crucial for any restaurant, including some important indicators such as the good taste of the food, the decoration of the dishes, freshness,

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Figure 2: Fast food restaurant chain Subway

2.2. Customer Satisfaction

Customer satisfaction is a result of the customers’ expectations and evaluations, and it is dependent of the degree of expectation that customers have during the acquisition of goods and services and of the impression of the company and the trait received, since they are experiences that stay in the customer’s mind and are the base for which they create their own perceptions (Alshurideh, Masa'deh, Alkurdi, 2012). For every company that wants to increase the values and assets of its customers, customer satisfaction plays a crucial role and influences directly the business performance; therefore, for any company customer satisfaction levels are a crucial indicator of success, so that they are commitment to provide them the best quality and conditions (Glowa, 2014).

On the other hand, customers’ perceptions of satisfaction in many cases may provoke different points of view and can be influenced by the culture, environment and the individual’s orientation concerning the appreciation of services and products (Patterson, 2008). Customer satisfaction or dissatisfaction has a close link with the individual’s expectations and with the experience that customers obtain from the service or product offered, which means that customer’s responses will depend on the grade that their expectations were reached (Bamford &

Xystouri, 2005). Further, the different services evaluation that customers build are determined by the diverse

beliefs and cultural norms that they possess, which means that each customer may create different perspectives of a particular service and all these appreciations vary from one customer to another and are depend on their prejudgments (Patterson & Smith 2001).

In restaurants, customer satisfaction has a strong relationship regarding the repeat purchase process. Today, the restaurants industry is a very competitive business, and there are several services factors as food quality, waiting time, space, food variety, and staff behavior, which have a special connection with customers satisfaction and with the action of repurchase (Law et al., 2004). Eating is the most important survival need that every individual has, each consumer has different motives to choose a particular restaurant to eat at, and it has been

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Therefore, most of successful companies are engaged with providing high quality services in order to increase the customers’ satisfaction level and to ensure the customer’s loyalty. This means that the companies that want to attract more customers and maximize the performance need to develop a unique value of quality, perceived by their customers as differentiated from other companies (Namin, 2017). Consequently, theservice quality is closely connected with the customer satisfaction and it can be perceived in relation of some elements such as the treats provided, specifically the relationship between the staff and the customers the environment, type of infrastructure and physical conditions (Lehtinen, 1991). In other words, depending on the quality of the services provided perceived by the customers, the image of the company may be created in a positive or negative way, and regarding to it, customers will transmit a favourable, or not, word- of-mouth of the company (Ladhari, 2007).

According to Chang & Chen (1998) service quality is one of the most important indicators of productivity and allows companies to have a special advantage to compete in the global market place. Thus, companies need to enhance their marketing strategies to increase positive customer’s responses. Another important element in the restaurants industry is the brand. Restaurants managers are improving their marketing strategies focused on the creation of a strong branding orientation (Warraich et al., 2013). Therefore, when a brand is able to accomplish with all its promises, it creates a positive consumers associations and increases the preference towards the brand. In other words, when the brand fulfils with all its commitments and consumer’s expectations, managers ensure the loyalty and satisfaction of their customers edifying long- term relationships (Hanif, Hafeez, & Riaz, 2010).

In previous literature, Glowa (2014) has identified the role of the companies’ employees as one of the most

important factors to achieve high customer satisfaction levels. Therefore, the attention, the treat and the engagement received are vital factors, which have a high influence on the conduct of the customers, and are responsible for building strong relationships, desires to repurchase and edify high levels of commitments. Thus, restaurants should enhance their service constantly in order to achieve a positive recognition of their customers

(Jaini, Ahmad, & Zaib, 2015). Consequently, according to Kahn (2000) the contact with customer face to face,

on internet, by phone, or whatever type of relationship, must be improved and centralized in order to discover and to respond to customer preferences and increase customer’s loyalty.

On the other hand, according to Fornell, Johnson, Anderson, Cha & Bryant (1996) consumers associate the degree of the quality provided with the price that they have to pay, which means that customers tend to relate the product or service they received with the amount of money they paid for. Therefore, for customers the price-value ratio is an important element and it contributes to create expectations regarding the company and the desire of the customers in terms with “return intention“ (Ribeiro Soriano, 2002). Hence, we can understand that consumers

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Continuing with the literature, we have to underline that other special indicators that impacts on customer satisfaction is related with the restaurant atmospherics. According to Heung & Gu (2012) atmospherics refers to the design of a comfortable space that may be able to provide to consumers a pleasant stay and stimulate their willingness and purchase intention. Therefore, atmospherics show an important influence on customer’s satisfaction and affect their wish to return to visit the local again, to communicate a positive opinion to other people and to recommend the place. The incorporation of several design factors such as colour, style, lighting, layout, and furnishing are the main elements that shape atmospheric dimensions (Countryman & Jang, 2006).

In addition, the perception of atmospheric and service function are crucial factors that impact on customer responses, thus, it means that when customers feel comfortable and satisfy in a good environment they will be encouraging to evaluate the visit to the restaurant as a positive experience (Jang & Namkung, 2009).

To conclude, nowadays one of the most important concerns of the customers is about the hygiene of the products and with the awareness of the importance of eating safe. The perspective of food safety has a close relationship with the physical, technological, biological and chemical dangers, therefore the food industry has the commitment of decreasing the use of this type of food dangers in order to provide food safety and strengthen high standards on customer’s satisfaction (Fatimah, Booa, Sambasivanb & Salleh, 2010).

2.3. Brand equity

Brand equity means much more for a company than advertising, good graphic arts, or the logo, it is a continuously work and effort, that allows companies to create wealth and increase their potential. In particular, a brand is a total sum of what people feel, think, believe and know of your company’s products and services. For companies to get successful brand equity is not a task of one day to other, it is a process that takes time to build, including the efforts and work that company conducts to understand the need of the consumers and choices, the time that the company spends designing the products and services according to the demand and need of the consumers, the credibility of the brand and the integrity of the company’s promises. Therefore, all these attributes help the company to improve sales, enhance the profitability, impose a competitive advantage, and leverage the opportunities to charge premium prices and open the way to new markets (Brothers, 2011).

In the case of the restaurant industry, the approach is the same, since a restaurant brand is much more than an attractive name. A strong brand possesses concrete characteristics, merits and advantages for their consumers

(Muller, 1998 ). For instance, an important characteristic to highlight is that global successful brands, such as

McDonald’s, KFC and Pizza Hut are companies that have invested in branding strategies and marketing research, in order to ensure that their brand value was aligned with the goal stablished to achieve (Tan, Devinaga &

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Brand equity is a combination of four important dimensions, namely brand awareness, brand image, perceived quality, and brand loyalty. It has been identified that one of the most important aspects that influences a restaurant brand equity, is quality, which is perceived and evaluated simultaneously when costumers acquire a service or product (Hyun & Kim, 2011). Further, brand equity is considered as the difference that exists between the consumers’ preference regarding a product with an established brand and another unbranded product with the same features standards. Consumer based brand equity has emerged because of the marketing activity, consumption experience, brand knowledge, environmental factors and corporate image (Yoo Donthu & Lee, 2001). Quick-service restaurant (QSR) chains are among the particular business, that need to construct strong brands, but this is an objective that is not easy to meet, especially because many quick-service restaurants possess services and products difficult to differentiate from the rivals. Therefore, given this competitive scenario, consumers frequently have only the brand equity and price, to distinguish one brand from its competence. In addition, building a strong brand equity able to impose a critical difference in the creation of an emotional affinity with customers is a goal to pursue for fast food industry (Kim & Kim, 2004). Brand equity is a gap through which companies can increase consumer’s preferences and purchase intentions. Therefore, due to this significant impact, it is important to manage brand equity in an efficient and optimal way (Cobb-Walgren, Ruble & Donthu, 1995).

An early finding of Hanaysha (2016) established that customers tend to do comparisons from one brand to

other, especially in terms of quality and price. Those different comparisons contribute to select and choose the brand they prefer, taking into consideration the relationship between the costs and benefits that the brand offers. Therefore, restaurant brands have to maintain a proper relationship between the services and products provided and the price stipulated, in order to be succeed and increase brand equity.

Further, Aaker & Joachimsthaler (2009) define Brand Equity (BE) as a series of assets and liabilities which are connected to a specific brand, that further enhance (or detract) value to (or from) the customers. Based on this theoretical approach, BE consists of Brand Loyalty, Brand Awareness, Brand Associations, Perceived Quality and Other Proprietary Assets.

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Figure 3: Brand Equity Model B: Brand Equity Model

(Aaker, 1991) (Keller, 1993)

2.3.1. Perceived Quality

There are some important clues that influence customers’ quality perceptions, namely humanic clues, that include service and appearance offered, mechanic clues, including the tangibles factors related with the service and functional clues, incorporating the technical performance of service. The customers’ perceptions are affected through the service experience they had. (Berry, Wall & Carbone, 2006). Quality is a crucial factor that will affect decisively how customers perceive the value provided and influence the level of customer satisfaction

(Kivela & Chu, 2001). Perceived quality is shaped by elements tied to the emotional interaction in the moment

of services and products purchase and through some aspects related to specific technical features (Nicolini & Salini, 2006).

According to Sanyal & Datta (2011) intrinsic characteristics of a product, conduct to increase perceived quality, and perceived quality is a precursor that contribute to increase brand equity. Therefore, since perceived quality is a set of assessment of the costumers with respect to the quality of any product that they perceived based in their appreciation, companies have to focus and improve the quality of their products, to be on the same line of the expected perceived quality and the real quality provided.

Brand Equity

Brand Loyalty Perceived quality Brand Association Other Proprietary Brand awareness

Brand

Knowledge

Brand

Awareness

Brand

Image

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One of the main indicators of customer satisfaction is service quality, because it makes customers satisfied and contributes to their intention to revisit the restaurant. It is important to highlight that responsiveness is an important factor, which could be understood as the degree that service providers are prepared and willing to provide to their customers timely services. Thus, in the fast food industry it can be considered that there is an increase in customer satisfaction when employees are able and willing to attend the need of their customers when required (Aftab, Sarwar, Sultan & Qadeer, 2016).

Every business needs to build and enhance customer satisfaction, because a company’s competitive advantage depends on its customers satisfaction and brand loyalty. Quality is a vital factor that works to edify the relationship between the company and its customers. This strong link adds an important value for the company, increasing the profitability and sustainability of the organization over a long period of time (Ojo, 2010). Further, Parasuraman,

Zeithaml, & Berry (1988) have classified a five dimensional model of service quality, namely: reliability,

responsiveness, empathy, assurance and tangibility. These five dimensions are a measurement instrument known as SERVQUAL, which has been used as a standard way to measure service quality. Each element of SERVQUAL has been used twice: to measure the perceptions and the expectations of service quality. Further, the main idea of this model is that service quality results in different scores regarding the expectations and perceptions.

These five dimensions include:

Table 1

SERVQUAL Model Parasuraman et al., (1988)

Tangibles

Physical facilities, equipment and appearance of personnel

Reliability Ability to perform the promised service dependably and accurately

Responsiveness

Willingness to help customers and provide prompt service

Assurance Knowledge and courtesy of employees and their ability to inspire

trust and confidence

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Delivering high quality service for customers is a crucial goal of companies, able to strengthen their competitiveness. Restaurants business is an industry that faces strong competition and challenging customer demands that need to be fulfilled through high service quality. Nowadays, restaurants chain face continuing changes regarding the consumers’ needs, forcing restaurants to improve their service and food quality (Ramseook-Munhurrun, 2012).

According to Kalra (2001) dinning out today is a characteristic of consumers’ routine, being part of their lifestyles. In a globalization era, customers have many new and different expectations in relation to the meaning of quality. For them well cooked food, good service, and clean interiors are some of the most important attributes that characterize a service quality. In addition, consumers’ perspectives vary from one to another; there are many factors that customers taking in to consideration when selecting a restaurant- High quality has been and continues to be a crucial factor to gain customers’ satisfaction. Service attributes also contribute for gaining competitive advantages in the food industry. Additionally, it is important to highlight that the service quality dimensions may vary across different service types (Marković, Raspor, & Dorčić, 2011).

Restaurants are aware of the need to manage their resources more efficiently, specially paying special attention

to the quality attributes, which is a crucial factor to increase customer’s satisfaction. As we have discovered in previous literature there are many characteristics that contribute to cementing high satisfaction levels of consumers, for instance: appealing food presentation, a fascinating and attractive interior design, pleasing background music, a reliable service, a responsive service, tasty food, spatial seating arrangement, and competent and friendly employees. These elements can work as a precursor to distinguish highly satisfied diners from non‐ highly satisfied diners (Namkung & Jang, 2008).

According to Prakash & Mohanty (2012) higher levels of service quality, generate higher levels of customer satisfaction, and for companies, customer satisfied represent an opportunity to increase sales and increase repurchase intentions. One important merit of service quality is that it is very difficult to imitate, therefore building a more enduring competitive advantage. Further, service quality is a challenge for any business, and every consumer demand more efficiently and professional services. It means that companies need to develop new approaches and strategies in order to provide high quality services, able to fulfill the need of the customers. Additionally, due to the strict competition, an important evaluation emerges for companies regarding to the knowledge about how to acquire and retain customers. It is essential to identify which are the main elements that influence directly customer’s satisfaction (Shukla, 2013). Nowadays managers of food restaurants have an

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Consumers make a positive evaluation if a product or service fulfils their demand, and if they are enough satisfied they will be loyal customers favoring brand equity. One important indicator that contributes to the assessment of customers’ satisfaction is the price, since it plays an essential role in the selection of a product. Therefore, the price has to be in accordance with consumers’ perceived expectation (Sabir, Irfan, Akhtar, Pervez, & Rehman, 2014).

In addition, perceived quality is considered as a customer’s judgment about the product and service itself,

based in the attributes provided and satisfaction is evaluated more in an emotional base since satisfaction triggers different emotions, feelings and responses of customers (Schneider & White, 2004). Finally, the main priorities of companies are the customers and it is evident that in today’s world, customer manage more information and are better educated and therefore more demanding regarding the expectations of quality. Consequently, companies have to be more prepared to fulfill these different requests, in order to satisfy them and meet their expectations

(Zangmo, Liampreecha, & Chemsripong , 2015).

2.3.2. Brand Associations

According with Keller (2004) customers’ associations with the brand creates the brand image in their mind,

which means therefore the formation of favorable brand associations in the customers’ mind will generate significant advantages to the brand. Thus, brand associations come through the appreciation of customers regarding brand´s quality. It is connected with the thought, ideas and psychological emotions that come to their mind regarding a brand (Pappu, Quester, & Cooksey, 2006). In addition, brand associations are used by marketers to position, to formulate positive attitudes, feelings and to recommend the benefits of buying (Low &

Lam, 2000). Nowadays one of the main goals of companies is to develop the more suitable marketing strategies

and to identify the reasons for global customers to choose a brand, in order to create positive brand associations

(Chen, Yeh, & Jheng, 2013). Brand associations explain the reasons for which customers buy or acquire a product

or service, representing the base of consumers purchase intention and brand loyalty (Wright, Millman, & Martin , 2007).

2.3.3. Brand Awareness

The creation of a brand name is a significant marketing issue for any company, since the brand name is influential at the moment of choice. In many cases, the brand name captures the attention of the consumers therefore, brand names can be considered with an effective impact toward brand equity (Alamgir, Nasir, &

Shamsuddoha, 2010). The most important characteristics of naming a brand should be creating a name that is

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In fact, brand awareness is a result of brand recognition and brand recall. Brand recognition represents how the

consumers can “recognise” a brand, while brand recall refers when consumers can recall a particular brand in the course of their decision-making choice, therefore, brand recall is the extent to which a brand name is recalled as a member of a brand, product or service class(Huang & Sarigöllü, 2012).

2.3.4. Brand Loyalty:

The intention of customers to repeat the purchasing of a product or service is what is known by brand loyalty,

which means that loyalty affects the choice and commitment of the consumers towards a specific brand, and for this reason the purpose of generating all the conditions and strategies to raise this behavior on the mind of consumers is a main priority for companies (Kumar & Advani, 2005). According to previous researchers, brand loyalty is identified as the customer desire to choose and prefer a brand as the first option, in other words when consumers tend to prefer a particular brand without paying attention to others brands they demonstrate a special loyalty towards the brand (Yoo et al., 2001).

In Oliver (1999), loyalty has been defined as the dimensions of commitment that a customer keeps with respect to acquire permanently a product or service. Brand loyalty is an essential opportunity for companies, because companies which maintain high levels of customer loyalty are able to decrease cost related to marketing communication, for instance by minimizing the requirement of sales promotion and advertising, in compared to the brands that keep low degree of loyalty, so that, maintain high levels of brand loyalty ensure a window of opportunities for companies (Drennan et al., 2015).

Ovidiu (2005) explored the same borders of Aaker’s model, analyzing other proprietary brand assets that

include patents, trademarks and channel relationships, which can provide strong competitive advantage. A trademark will protect brand equity from competitors who might want to confuse customers by using a similar name, symbol or package. A patent can prevent direct competition, if strong and relevant to the purchase decision process. Finally, a distribution channel can be indirectly controlled by a brand as customers expect the brand to be available.

To understand more deeply these dimensions, we can review the Aaker’s equity model, which has different interconnections that represent the four dimensions discussed above; we can observe that Aaker has connected the four dimensions, in relation to customers’ perceptions and responses to the brand and every dimension was examined following the more appropriate particular effects of brand equity., Therefore the model could work as a

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According to the American Marketing Association (AMA), a brand is a “name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.” For companies, that work to create different types of strategies to retain customers, brand loyalty has a critical importance, since the brand is the most important element that a company possesses to differentiate from others (Pourdehghan, 2015). Therefore, brand loyalty is a very important

instrument for any company because it has been identified as having a special contribution to reduce companies’ operational costs, like for instance promotion, cross-selling, and up-selling costs (Shobri, Wahab, Ahmad & Ain, 2012).

Brands are the core of companies, because a brand can trigger a set of emotions and feelings in the consumer’s minds, causing consumers’ identification with the brand as well as brand loyalty. In many cases, brand loyalty is influenced through cognitive, affective and conative backgrounds (Dick & Basu, 1994). Companies need to create trust with customers. The real trust could mean the credibility in two elements, namely care and congruency. Another important element is keeping promises, thus, the position of a brand and the commitment in practicing a transparent and an efficient model of operation generates customer satisfaction and therefore contributes to increase customer loyalty and trust, allowing customers to have the desire to return to the brand again (Mckinney & Benson, 2013).

Chanda (2010) highlights the importance of a strong brand, and the potential that it has to expand into new

foreign markets. The creation of a successful brand means an essential source to face the competitors and an expected decrease in the volatility of returns. In addition, according to Doyle (2001) the second most relevant asset in a company after the customers, is the brand effect which means that brand provokes different impact on consumers and helps to increase the stakeholder value, adding a particular merit to the business.

A brand represents an intangible asset that may be the pillar of competitive advantage and contribute to future successful growth of the companies (Aaker , 1991).

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Figure 4: Customer Based Brand Aaker’s Equity Framework Source: Aaker’s (1992, 1996)

2.4. Word-of-Mouth

Word-of-mouth (WOM) has been identified as a major force with a high impact in business and which influences directly what people do, feel and know (Buttle , 1998). Marketers have identified the power of

word-of-mouth, which is based on customer’s information exchange about a product or services according to the experience that they have had, therefore influencing the purchase decision of other customers (King , Racherla ,

& Bush, 2014). Hence, for companies the most important valuable customers are the ones that are able to bring

new potential customers, through the spread of a positive word-of-mouth to other customers (Kumar, Petersen, & Leone, 2007).

According to Casielles, Álvarez, & Lanza (2013) customers who spread their experience to other (senders) may use different way of expression to transmit the message to other individuals, and these ways of expression are considered on base of some elements: usage of words, and language usage, which capture the attention of

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negative, for example, a message usefulness is considered for the way that the sender spread the information and the strength of expression, this communication is considered on base of some elements: usage of words, and language usage, which capture the attention of people. In addition, according to Bansal & Voyer (2000) WOM is perceived as the main bridge of language, possessing a strong influence on the field of communication in comparison with other communication channels. Therefore, for business this important link of communication should be managed with good strategies, and control, in order to increase the sales gain and the profitability of the company (Khuong, Phuong, & Chau, 2016). We can consider as a main precursor of word-of-mouth, the customer satisfaction, because the level of satisfaction that customers create and maintain in their mind will definitely influence the exchange that they will have with other individuals (Liang & Wang, 2007).

In the case of restaurants, word-of-mouth plays a role very important since it is considered one of the most important channels of communication, able to contribute to the success of restaurants. Some attributes such as food quality, service quality, price, physical environment quality, are meaningful elements regarding to purchase decision that can be shared through word-of-mouth (Basri, Ahmad, Anuar, & Ismail, 2016). Further, WOM is a relevant element to get and retain more customers. The core of word-of -mouth for any company is customer satisfaction, since when customers feel satisfied and have enjoyable service experiences, they will feel motivated to encourage their family and friends to visit the place and buy the products. Therefore, we may consider that WOM and customer satisfaction have a special relationship (Babin, Lee, Kim, & Griffin, 2005).Building good relationships with customers in order to gain their loyalty should be a crucial approach of companies, because it guarantees their commitment to transmit a positive image of the business regarding the attributes of the products and services. Thus, we can considered that satisfied customers are the key to attract more new customers through a positive word-of-mouth communication (Zamil , 2011).

For the restaurant industry, it is very important to discover which services or products are the most satisfying for the consumers, because when a customer feels satisfied with the services or products provided, they will increase the loyalty towards the company and will feel motivated to recommend the company to other people (

Taghizadeh, Taghipourian, & Khazaei, 2013). According to Oslen (2012) restaurants, in general, have their

own strategies to be competitive in the marketplace. Each restaurant has to increase the customers’ retention, which is always a result of the quality of the service provided. If the restaurants are not able to maintain this attribute it could cause the lack of loyalty of the customers and therefore the unwilling to come back.

There are important associations that customers make when dinning out. Usually when people go out, they want to be relaxed and to pass a good moment with their friends or family. In general, they habitually go to celebrate a special day, and all these moments are connected with a diner’s emotions, therefore, the food quality

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Additionally, the time customers wait when they order and the quality provided by restaurants are crucial elements associated with the level of customer satisfaction (Adiele & Kenneth-Adiele, 2017). Therefore, managers in the fast food industry must improve their brand equity, by offering unique services and products, and understand how important word-of-mouth is, which works as a key communication strategy that influences directly brand equity and ensures a company’s success (Hanaysha, 2016). For the restaurant industry WOM is an effective promotion tool for the success of the business, but it needs time to spread and develop, especially when it is a positive word of mouth message (Gehrels, Kristanto, & Eringa, 2006). In addition, for any company a negative word of mouth represents a high disadvantage Assael (2004) identified that the impact of a negative word of mouth can be more significant that a positive word-of-mouth. That is why it can be considered that a negative WOM is spread faster than a positive WOM and can be destructive for the image of the company. Therefore, if a customer if dissatisfied will share his frustrations and negative experience with a larger number of people, than when he is satisfied, causing the refuse of the products and services offered by the company in the customer’s mind.

On the other hand, nowadays there is a new important tendency of word-of-mouth that has grown with theonline social media, and which is present in the entire world. The new WOM communication called eWOM, or word-of-mouse, is a new global online channel, where any company can have the opportunity to listen more carefully about the customers’ needs, in order to promote their services and products, and above all, to have more online business opportunities in relation to interpersonal impact (Yang, 2013).

2.5. Brand Image

Crompton (1979) states that the image represents “The sum of beliefs, ideas and impressions that a person has of a destination”. pp 18. This means that we connect with the brands we like the most, on different ways, for instance we demonstrate brand loyalty when we wear our preferred clothes or when we use the technologies we are more interested in or when we use our favorite accessories, that represent all the set of emotions when we connect to a brand which we identify to regarding our likes and wishes (Keller, Parameswaran & Jacob, 2008). Additionally,

Fichter & Jonas (2008) defined image, as all the different types of stereotypes that individuals shape and create

toward a particular brand and suggest that the effect that image has on consumer behavior is similar to stereotypes in social cognition. Additionally, we can understand that stereotypes take place when people think “categorical” with respect to other (Macrae & Bodenhausen, 2000).

Further, it is common that people choose a particular brand inspired by others, especially when people belong to a specific member group or wish to be part of a particular group in the society (Escalas & Bettman, 2003).

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in providing a really competitive brand equity, in order to create strong a relationship with the customers (Mackay,

et al., 2013). According to Pavesic (1989) Brand image is for restaurants industry a strong indicator of the success

of food service, due to its importance in helping consumers to visualize and in creating positive attitudes of the services or products prior to purchasing.

According to Keller (2008) the management of consistent brand names, symbols, and positioning issues contribute to establish a consistent brand image. Able to get to different countries and cultures in a successful way. Restaurant image form the reputation that the company has, and which play an important role in the interest of the group of various audiences, that are known as stakeholders, The main stakeholders of the companies are: customers, government regulatory agencies, distributors and retailers, shareholders, general public, and employees, social action organizations, financial institutions and analysts, therefore, image represents the way a company is perceived by the people, especially in the eye of stakeholders image is fundamental and will impact in their future decision to either or not provided the support to the company (Schulz, 2012).

Lindstrom (2005) states that nowadays most successful companies utilize their marketing campaigns to

capture the five senses on consumers. Therefore, we can understand that spreading branding messages that involve all five senses are vital to connection emotionally the brand and the customers. Therefore, visual, touch, sound, smell, and taste are main sensory elements that must be considered to ensure the interest of customers towards the brand. Additionally, companies need to build long-term strategies specially pointed on brand identities. For example, colour is able to improve the ability to identify brands and the sight memory of brands. Further, colours can revive, shape and stimulate different emotion on people (Perry & Wisonm, 2003). Consequently, the use of different colours is a crucial resource to capture the attention of people, guiding customers to recognize the brand, and to shape the perspectives of image (Chang & Lin, 2010).

On the other hand, to advertising represents a main instrument to build successful brands and to build a strong global brand image, particularly in new markets. When companies want to launch a brand, they have to examine the target audience and to identify which are their preferences, and their individual decision – making, as well as to determinate their best marketing strategy to compete with the different types of brand existing in the market

(Teichert, Effertz, Tsoi & Shchekoldin, 2015). Consequently, related with fast food companies, managers are

focusing on advertising especially to children, and on promoting food through television, newspapers, and radio. In other words, the different communication channels are crucial for companies to take advantage to promote and to spread global messages (Tim, Beevi & Yeap, 2014).

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spiritual orientations play a significant role that build social behavior and influence the choice, attitudes and consumption about any particular brand image or product (Torlak, Tiltay, Doğan & Özkara, 2013).

2.6. Customer Trust

For every segment of business, the customer’s trust is a crucial point. In this changing world, one important

practice that has been put into practice is the construction of good connections with the customers. It can be considered as an easy and less expensive strategy, because a few customers may purchase a large amount of products. It has been identified that dimensions, as brand predictability, brand competency, and brand reputation are agents that influence the consumer’s trust on a brand. It is noticeable that consumers’ trust in a brand is created at the moment that consumers use that brand and collect data about brand reputation and its predictability. If a brand reputation is good, it achieves the predictability of consumers and it is able to satisfy the consumer’s needs, allowing the development of customer trust on the brand. When companies implement effective advertising methods, brands edify their image, which benefits customer’s trust and credibility (Afzal et al., 2009).

The definition of trust has been widely explored. Lau & Lee (1999) consider that trust is the result of consumers’ willingness to believe and rely on the brand in the face of risk, because the perspective of the brand will produce positive results. When one party has confidence in another party, it will cause favorable behavioral intentions in relation to the other party. In the consumer environment, there exists frequently a large group of anonymous customers, making hard for companies to develop a personal relationship with each customer. Therefore, customers are forced to rely on the symbol of the brand to build that connection thus, in this case the brand works as a substitute for human communication between the company and its customers and therefore developing customer trust is vital to maintain sustainability.

Chaudhuri & Holbrook (2001) state that trust is able to minimize the feeling related with customers

uncertainty, specially in situations where consumers feel at risk. Therefore trust the decisions of every customer.

Swaen & Chumpitaz (2008) stated that there are three important elements that define customer trust, namely

perceived benevolence, perceived integrity, and perceived credibility and these perceptions play a determinant role to visualize the extent of customers trust regarding a particular company or brand. Further, Patrick (2002)

considers customer trust as the combination of feeling, emotions, and thoughts or behaviors, expressed by the consumers in the moment that they feel that they can rely in the providers. Goyal & Singh (2007) stated that in the food industry it is crucial to provide customers important information regarding hygiene, food variety, quality and nutrition value, in order to build and maintain customer trust. Further, due to a more aggressive competition,

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For the restaurants business to achieve and maintain customers’ trust it is a goal on a priority scale. For overall customers the issues of food safety are very significant. There are four dimensions identified as connectors of consumer confidence in the safety of food, such as, the credence in regulators and actors in the food restaurant, consumer recall of food safety incidents, the perceptions in relation to the safety of products, and customers’ characteristics (Jonge, Van Trijp, Renes & Frewer, 2010). Further, Abdullah & Kanyan (2013) reveal that, since in today’s market, the competence of the foodservice has become a challenge, it is necessary to find a balance between the way to be more productive and creative and the way of finding proper methods to keep customer’s trust. Trust, communication and commitment are evident determinants of a valuable relationship between the customers and the company able to increase strong customers’ connections.

For overall companies, trust is influenced by the company’ image, therefore the interrelation between image and trust is very relevant. Consequently, companies need to achieve long-term relationships with their consumers in order to obtain an advantageous position in the market. Therefore, first it is necessary to develop and keep a good brand image, which influences the building of trust (Madura, Stecko & Mentel, August 2016). Eisingerich

& Bell (2008) reveal that enhancing customers’ service knowledge intensifies customer trust in companies.

Consumers who trust in a particular company expect that the declared promises are respected, and the company to work on the base of their interests (Nguyen, Leclerc & LeBlanc, 2013).

3. Conceptual Framework and Hypotheses

In this chapter, we will explore the conceptual model of our study, in order to examine the main topic of our research. As a next step, we will propose a theoretical explanation for the hypotheses formulation, which are based and elaborated following the previous literature.

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Table 2

Investigation Hypotheses

Proposed Hypotheses

H1: Brand loyalty is positively associated with brand equity H2: Brand awareness is positively associated with brand equity H3: Perceived quality is positively associated with brand equity H4: Brand associations are positively associated with brand equity H5: Perceived quality is positively associated with customer satisfaction H6: Brand image is positively associated with customer satisfaction H7: Customer satisfaction is positively associated with brand loyalty H8: Brand equity is positively associated with word-of-mouth

H9: Brand equity is positively associated with customer’s trust

H10: Customer satisfaction is positively associated with word-of-mouth H11: Customer satisfaction is positively associated with customer’s

trust

Hyun & Kim (2011) defend that brand equity is composed of a set of four significance extensions including

brand awareness, brand image, perceived quality, and brand loyalty. Therefore, brand loyalty is considered an important dimension of brand equity. In addition, as stated by Kumar and Advani (2005) customer’s loyalty

impacts in the commitment and choice towards an individual brand, since when customers contemplate the idea to repeat the purchasing of any product or service is when they keep high levels of brand loyalty. In addition, a finding made by Yoo et al. (2001) shows that brand loyalty influences extremely the customer’s decisions allowing them to keep the fidelity to prefer a specific brand as the first option without paying attention to other brands. Similarly, in Chanda (2010) is recognized that brand loyalty is a factor that leads companies to excel with a unique value. Therefore, brand loyalty is considered an important dimension of brand equity. Thus, we propose that:

H1: Brand loyalty is positively associated with brand equity

According to Keller (2008) brand awareness provokes different emotional connections in the consumers toward a special brand and these set of emotions stay and recall in the mind of the customers persuading at the

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H2: Brand awareness is positively associated with brand equity

According to

Sanyal & Datta (2011) perceived quality is an important indicator that contributes to increase

brand equity. One of the reasons for which perceived quality is positively associated with, brand equity is because consumers make evaluations of the quality of a product or service received, and if the product or service fulfils their desires and demand, they will become loyal to company contributing to the development of brand equity

(Sabir et al., 2014). Therefore, we can deduct that perceived quality leads to the growth of brand equity because

when customers are pleasured with the product or services provided by the companies, they will keep favorable experiences that will benefit brand equity.

Similarly a finding conducted by Prakash & Mohanty (2012) states that when a company generates higher levels of service quality, it will create and increase higher levels of customer satisfaction, and as we know for any company customer satisfaction represents the main weapon to the success. When companies are prepared to delivery services quality they will maintain a value very difficult to imitate. In todays’ world every consumer demand more efficiently and professional services and products, therefore, if companies delivery high service quality in all its dimensions, customers will perceived it and through perceived quality any company can walk towards success. Thus, we propose that:

H3: Perceived quality is positively associated with brand equity

In Keller (2004) it is expressed the importance of brand associations towards brand equity. The associations that come in the mind of customers regarding a brand, contribute to shape the brand image of the company, which means that the formation of beneficial brand associations in the customers’ mind will generate meaningful advantages to the brand. Brand associations come through the appreciation of customers regarding to brand´s quality; brand associations have a link with the different thoughts, ideas and psychological emotions that come in the consumer’s mind regarding to brand.

Additionally, brand associations play an important role when consumers buy or acquire a product or service, since they work as a significant base that influences consumers purchase intention (Wright et al., 2007).

According to Low & Lam (2000) brand associations are a pivotal key, which is used by marketers to create positive attitudes, feeling and to recommend the benefits of buying, suggesting that brand associations are a strong determinant of brand equity. To conclude based on all those arguments that connect brand associations to brand equity, we can consider that convenient brand associations lead to a growth of brand equity. Therefore, we propose that:

H4: Brand associations are positively associated with brand equity

Kivela & Chu (2001) explore the meaning of quality, indicating that quality is an essential element able to

The determinants of customers’ trust and perceptions in the fast food industry

Dissertation

Master in International Business